MANAGEMENT

PRINCIPLES AND
APPLICATION

REPORT ON STUDY OF
MANAGEMENT OF SBI.

Submitted By Submitted To
Sahil chadha Dr. Meghna Malhotra
Roll no. 2307
B.com.Hons. Sec. II
ACKNOWLEDGEMENT

I would like to thank Dr. Meghna Malhotra for giving me the opportunity to study on the
management of State Bank of India and have such a learning experience and clarity of
Principles of Management and their practical use in such big organizations. I also thank her
for her constant support in analyzing and collecting information to assemble this report.

I would also like to thank Mr. Anil Chadha, Assistant general manager, State Bank of India
Head Office, Mumbai, who gave me the internal information regarding management of SBI.

INTRODUCTION

State Bank of India (SBI) is an Indian multinational, public sector banking and financial
services company. It is a government-owned corporation with its headquarters in Mumbai,
Maharashtra. On 1st April, 2017, State Bank of India, which is India's largest Bank merged
with five of its Associate Banks (State Bank of Bikaner & Jaipur, State Bank of Hyderabad,
State Bank of Mysore, State Bank of Patiala and State Bank of Travancore) and Bharatiya
Mahila Bank with itself. This is the first ever large scale consolidation in the Indian Banking
Industry. With the merger, State Bank of India will enter the league of top 50 global banks
with a balance sheet size of 33 trillion, 278,000 employees, 420 million customers, and
more than 24,000 branches and 59,000 ATMs. SBI's market share will increase to 22 percent
from 17 per cent. It has 198 offices in 37 countries; 301 correspondents in 72 countries. The
company is ranked 232nd on the Fortune Global 500list of the world's biggest corporations as
of 2016.

ABOUT SBI & ITS VISION & MISSION

Founded in 1806, Bank of Calcutta was the first Bank established in India, and over a period
of time, evolved into State Bank of India (SBI). SBI represents a sterling legacy of over 200
years. It is the oldest commercial Bank in the Indian subcontinent, strengthening the nations
trillion-dollar economy and serving the aspirations of its vast population.

The Bank is Indias largest commercial Bank in terms of assets, deposits, branches, number
of customers and employees, enjoying the continuing faith of millions of customers across
the social spectrum.

SBI, headquartered at Mumbai, provides a wide range of products and services to individuals,
commercial enterprises, large corporates, public bodies and institutional customers through
its various branches and outlets, joint ventures, subsidiaries and associate companies.

VISION

My SBI: My Customer first.

My SBI: First in customer satisfaction

MISSION
 We will be prompt, polite and proactive with our customers.
We will speak the language of young India.
We will create products and services that help our customers achieve their goals.
We will go beyond the call of duty to make our customers feel valued.
We will be of service even in the remotest part of our country.
We will offer excellence in services to those abroad as much as we do to those in
India.
We will imbibe state of the art technology to drive excellence.

VALUES

We will always be honest, transparent and ethical.

We will respect our customers and fellow associates.
We will be knowledge driven.
We will learn and we will share our learning.
We will never take the easy way out.
We will do everything we can to contribute to the community we work in.
We will nurture pride in India

OPERATIONS

SBI provides a range of banking products through its network of branches in India and
overseas, including products aimed at non-resident Indians (NRIs). SBI has 14 regional hubs
and 57 Zonal Offices that are located at important cities throughout India.

Domestic presence

SBI has 18,354 branches in India. In the financial year 201213, its revenue was 2.005
trillion (US$31 billion), out of which domestic operations contributed to 95.35% of revenue.
Similarly, domestic operations contributed to 88.37% of total profits for the same financial
year.

Under the Pradhan Mantri Jan DhanYojana of financial inclusion launched by Government in
August 2014, SBI held 11,300 camps and opened over 3 million accounts by September,
which included 2.1 million accounts in rural areas and 1.57 million accounts in urban areas.

International presence

As of 201415, the bank had 191 overseas offices spread over 36 countries having the largest
presence in foreign markets among Indian banks. It has branches in Singapore,
Moscow, Colombo, Dhaka, Frankfurt, Hong Kong, Tehran, Johannesburg, London, Los
Angeles, Male in the Maldives, Muscat, Dubai, New York, Osaka, Sydney, and Tokyo. It
has offshore banking units in the Bahamas and Bahrain, and representative offices in
Myanmar, Bhutan and Cape Town.

Associate banks

SBI acquired the control of seven associate banks in 1960. They were the seven regional
banks of former Indian princely states, all of them which were renamed with the prefix 'State
Bank'. These seven banks were State Bank of Bikaner and Jaipur (SBBJ), State Bank of
Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP), State Bank of
Travancore (SBT), State Bank of Saurashtra (SBS) and State Bank of Indore (SBI - Indore).
All these banks used the same logo as its parent bank.

The State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State
Bank of Patiala and State Bank of Travancore, and BharatiyaMahila Bank were merged with
State Bank of India with effect from 1 April 2017.

Employees

SBI is one of the largest employers in the country with 209,567 employees as on 31 March
2017, out of which there were 23% female employees and 3,179 (1.5%) employees with
disabilities. On the same date, SBI had 37,875 Scheduled Castes (18%), 17,069 Scheduled
Tribes (8.1%) and 39,709 Other Backward Classes (18.9%) employees. The percentage of
Officers, Associates and Sub-staff was 38.6%, 44.3% and 16.9% respectively on the same
date. Around 13,000 employees have joined the Bank in FY 2016-17. Each employee
contributed a net profit of 511,000 (US$8,000) during FY 2016-17.

PLANNING

The three-year stint at the helm has perhaps been too short to make a significant difference to
a large entity like SBI, but Bhattacharya surely managed to lay down a solid foundation for
growth. She started by setting six strategic goals - digital, technology, improving delivery
standards, cost reduction, NPA reduction and risk management - and ensured the bank made
considerable progress on all fronts. Given the constraints and challenges, her performance,
therefore, was on the top of the mind of the jury when they selected her as the banker of the
year.

Bhattacharya's hands-on approach with digital initiatives, such as mobile apps for retail, SME
and corporate customers, was well received. She is positioning the bank as 'the banker to
digital India'. "The bank will begin to look different in a year or so. In the next 12-18 months,
you will see us doing lot many more delivery in the areas of artificial intelligence and
robotics," she adds. Under her stewardship, the bank has also been working on improving
customer relations, increasing the value of accounts and improving processes. "There will be
a lot of centralization of processes and, subsequently, the branches will be reoriented towards
advising rather than merely giving small-value services," says Bhattacharya. She has also
started a training programme for employees and launched a new HR initiative to encourage
meritocracy and cut down on subjective evaluation of employees. Under the new system, 65
per cent marks will be based on performance, which will include specific targets, 5 per cent
marks will be given to those who successfully complete the training programme and
remaining 30 per cent markings will be reviewed by the supervisor. Bhattacharya is also
making a good beginning towards the less-cash society. She has, in fact, been one of the
voices in support of demonetization. "She has led the transformation of SBI as a modern-age
bank. She has been articulating the critical issues impacting the banking industry. In fact, she
is an acknowledged voice of the banking industry at all forums," says Birendra Kumar, MD
and CEO, International Asset Reconstruction Company. The area of concern for
Bhattacharya, however, is the deteriorating asset quality, which have reached almost `1 lakh
crore in 2015/16. The mid-corporate segment has seen highest gross NPAs at 17.12 per cent
followed by SMEs at 7.82 per cent and 6.93 per cent in agri loans.

STRATEGY

Strategies employed by State Bank of India-

To counter the intense competition from private and foreign banks, SBI carried out a
major Organizational restructuring exercise. The key aspects involved:
Redesigning of Branches.
Technological upgradation (Core Banking System).
Providing alternate channels.
Focus on a lean structure.

The objective being to increase customer satisfaction &convenience, simplifying

processes for employees, enhancing SBI's competitiveness in the market and in turn
increasing the profitability through higher market share and improved process
efficiency.
Launched new products and services to enhance its image as a customer friendly
Bank.
SBI has also entered into several alliances and tie-ups with automobile, insurance,
mutual fund, project finance and medical equipment companies.
Marketing initiatives to improve its reach, e.g. aggressive marketing through print and
television media.

Porters Five Forces Analysis

1. Competitive Rivalry: The financial services industry has been around for hundreds of years
and just about everyone who needs banking services already has them. Because of this, banks
must attempt to lure clients away from competitor banks. They do this by offering lower
financing, preferred rates and investment services. The banking sector is in a race to see who
can offer both the best and fastest services.

2. Buyer Power: High With the emergence of larger number of players in the Banking
Industry, the switching cost of the buyer has gone done significantly. The onus is now on the
effectiveness and speed with which the services are provided to the customers. Financial
institutions - by offering better exchange rates, more services, and exposure to foreign capital
markets - work extremely hard to get high-margin corporate clients. Options in the Auto
Finance Sector also give the customers more power to decide upon the kind of financing.
Introduction of specialized products for Women and Students etc. also show that the buyer
power is high in this Industry.

3. Supplier Power: Low suppliers of capital do not pose a big threat, but the threat of
suppliers taking away the human resource. If a talented individual is working in a smaller
regional bank, there is the chance that person will be enticed away by bigger banks,
investment firms, etc.

4. Threat of New Entrants: Low Starting a bank in a country like India is not as easy as any
other industry, but if a new bank is started that is mainly targeted on Niche Segments might
pose a threat to SBI. The new entrants from a different country are always discouraged to
take part in the financial and banking sector by regulatory reforms limiting foreign presence.
Threat from other non-banking financial services could also pose a threat especially equity
investment, insurance etc. Entrant of a larger player can cause a drastic effect on the not so
strong name in banking or the bank with low income but would not cause any significant
effect on SBI.

5. Threat from Substitutes: Low As you can probably imagine, there are plenty of substitutes
in the banking industry. Banks offer a suite of services over and above taking deposits and
lending money, but whether it is insurance, mutual funds or fixed income securities, chances
are there is a non-banking financial services company that can offer similar services. On the
lending side of the business, banks are seeing competition rise from unconventional
companies. Sony, General Motors and Microsoft all offer preferred financing to customers
who buy big ticket items. But these substitutes do not affect SBI due to its huge brand name
and presence in the market.

SWOT Analysis

Strengths:

SBI is the largest bank in India in terms of market share, revenue and assets.
 As per recent data the bank has more than 13,000 outlets and 25,000 ATM centers.
The bank has its presence in 32 countries engaging currency trade all over the world.
The bank has a merged with State Bank of Saurashtra, State bank of Indore and the
bank is planning to go further acquisition in the current FY2012.
SBI has the first mover advantage in commercial banking service.
SBI has recently changed its vision and mission statements showing a sign of
inclination towards new age banking services.

Weakness:

Lack of proper technology driven services when compared to private banks.

Employees show reluctance to solve issues quickly due to higher job security and
customers waiting period is long when compared to private banks.
The banks spend a huge amount on its rented buildings.
SBI has the largest number of employees in banking sector; hence the bank spends a
considerable amount of its income in employees salary compensation.
In spite of modernization, the bank still carries the perception of traditional bank to
new age customers.
SBI fails to attract salary accounts of corporate and many government sector
employees salary accounts are also shifted to private bank for ease
of operations unlike before.

Opportunities

SBIs merger with five more banks namely State Bank of Hyderabad, State bank of
Patiala, State bank of Bikaner and Jaipur, State of bank of Travancore and State bank
of Mysore are in approval stage.
Mergers will result in expansion of market share to defend its number one position.
SBI is planning to expand and invest in international operations due to good inflow of
money from Asian Market.
Since the bank is yet to modernize few of its banking operations, there is a better
scope of using advanced technologies and software to improve customer relations.
Young and talented pool of graduates and B schools are in rise to open new horizon to
so called old government bank.

Threats

Net profit of the year has decline from 9166.05 in the year FY 2010 to 7,370.35 in the year
FY2011.This shows the reduction in market share to its close competitor ICICI
other private banks like HDFC, AXIS bank etc.

FDIs allowed in banking sector is increased to 49% , this is a major threat to SBI as people
tend to switch to foreign banks for better facilities and technologies in banking service.
Other governments banks like PNB, Andhra, Allahabad bank and Indian bank are showing
Customer prefer to switch to private banks and financial service providers for loans and
mortgages, as SBI involves stringent verification procedures and take long time for
processing.

ORGANISING

TOP MANAGEMENT ORGANISATION STRUCTURE:

MANAGEMENT OF STATE BANK OF INDIA

The management of the bank vests in a central board of directors which consists of
appointees of government of India, nominees from the government of India and reserve bank
and elected representatives of private share holder. The constitution of central board of
directors is shown in table as follows:
The Chairman, Deputy Chairman and managing directors hold office for such term not
exceeding 5 year as the central got, may fix at the time of appointed them. They are eligible
for reappointment. The ex-officio director and those nominated by the central government
hold office for 4 years and are eligible for re-election and re-nomination. Other nominated
director holds office during the presence of nominated authority.

Hierarchy of management:

The term level involves people arranged in series. Thus levels of management suggest the
arranged managerial position in an organization. In State bank of India there are four
management levels or grades except board of directors. Directors are nominees of
government, Reserve bank of India, Shareholders and workers or employees. These
management levels are constituted from seven scales of managers. Scale of managers and
their name is hierarchy of management is given below.
STAFFING

RECRUITMENT OF STAFF IN STATE BANK OF INDIA

In the matter of recruitment of clerical and subordinate staff, subsidiaries follow a more or
less uniform policy based on 96 the guide-lines issued by the state bank of India on matters
like notification of vacancies through employment exchanges minimum qualifications
relaxations to certain categories of candidates etc. subsidiaries are encouraged to adopt
modern techniques in selecting proper candidates for these jobs. As regards recruitment of
officers taken directly a selection board has been constituted by the State bank of India which
makes selection of candidates on an all India basis both for the State bank of India and
subsidiaries. Besides saving costs for the subsidiaries, it is stated that the board ensures that
officers of right type with good academic qualification are taken in the service of the
subsidiaries.

TRAINING OF STAFF IN STATE BANK OF INDIA

The state bank of India's experience in training span more than four decades and is based on
an in-depth understanding of the business and banking environment, domestic as well as
international. The State bank of India also provides training to officers of the subsidiaries in
their various specialized departments at their central office and local head offices. Training in
the State bank of India is a proactive, planned and continuous process as an integral part of
organization development. It seeks to impart knowledge improve skills and re-orient attitudes
for individual growth and organizational effectiveness. Some of the officers of the
subsidiaries are also taken on deputation by the state bank of India. So that these officers may
in due course be equipped to take up responsible assignments in the respective subsidiaries.
Periodical conferences of the Central office of State bank for discussion of business
strategies, personnel, policies, new techniques in development of business etc.'' In view of the
rapid expansion programme of the subsidiaries, due attention is given to the aspect of training
of personnel in the subsidiaries. All the subsidiaries have been encouraged to open residential
and non-residential training centers in the lines of the State bank.

SBI offers largest learning & development infrastructure in Indian Banking space with 47
learning centers and 5 apex institutes across the country. Additionally the bank offers over
300 e-lessons including 30 created by the Harvard Business School. Additionally, we have
tie-ups with globally reputed management institutes for specialized training and skill
enhancement programs. For our new recruits, our intensive 2 year training program is
designed to be a healthy mix of classroom training and on the job learning. On joining, you
undergo a 1 week developmental program on leadership and 6 weeks of intensive classroom
program across 6 functional areas - General Banking, Credit, Marketing, Investment
Banking, Rural Banking and IT. Additionally you undergo 1.5 years of cross functional
rotational programs across branches for a holistic grooming for a banking career.

DIRECTING
HR audit, Strategic Training Unit, leadership development - SBI is doing all that it takes to be
an employer of choice.

The public sector legacy means that the SBI management's hands are tied. The bank can pay
only a fraction of what competitors do; promotions are still largely time-bound; long rural
stints are a must; and recruitments are time-consuming - reasons that may be enough for
critical talent to head for the exit door.

The bigger challenge, he says, is to attract the right kind of talent in specialized functions that
SBI has got into: Private equity, treasury, risk management, general insurance etc.

For example, the bank has been looking for a chief economist for some time now. But the
available pool is small, and though the right candidates are enthused by the challenges that
the job offers, the remuneration is a problem as SBI just can't match competition.

The process started when soon after taking charge, Chairman OP Bhatt held an offsite in
Amby Valley, which resulted in documenting "The State of the Nation" - the bank's strategy
paper. Employees were then asked to document their vision for SBI. This set the ball rolling
for the mindset change.

Earlier, review meetings started with how SBI was losing market share to ICICI Bank and
HDFC Bank. That changed to what SBI can learn from them and how it can beat them. But
the idiom now is how SBI can hold on to its lead.

Another initiative of the STU is setting up of an elaborate e-learning platform. The bank
offers 130 courses on its intranet at present, but the problem is that only 2,000 employees can
log in to the system concurrently. The idea now is to have customized courses for each level
of employees who can take online tests as well. Apart from the 120-odd B-school graduates
(not the IIMs) that it plans to recruit for highly-specialized functions, SBI for the first time
has recruited 500 Scale-II managers directly (probationary officers join in Scale-I after two
years of training) for functions that require specialized knowledge. So, the overall knowledge
levels of its officers are being scaled up gradually. Raja agrees the pay scales are still not
enough to attract top B-school graduates, but says that SBI doesn't fare badly if overall cost-
to-company (CTC) is taken into account. For example, CTC of a probationary officer is Rs
4.8-5.2 lakh if other facilities like free housing, medical reimbursements, furniture allowance
etc. are considered.

CONTROLLING

Organizational control centers:

From the table it is clear that top management is headed by chairman and managing director.
They are responsible for corporate and strategic control. Second level of management is
circle management is circle management headed by chief general manager and general
manager with the responsibilities of management control. After that zonal management is
headed by deputy general manager and assistant general manager with the responsibilities of
operational control.
REFERENCES

1. https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&cad=rja&
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Bs4QFghPMAY&url=http%3A%2F%2Fshodhganga.inflibnet.ac.in%2Fbitstream%2
F10603%2F20476%2F11%2F11_chapter_4.pdf&usg=AOvVaw3ek0hl8zIVGR1456T
MzVpU
2. http://www.rediff.com/money/report/arundhati-bhattacharyas-super-six-strategy-
worked-wonders-for-sbi/20150818.htm
3. https://www.scribd.com/doc/25961830/State-Bank-of-India-Strategy-Analysis
4. https://www.sbi.co.in/portal/web/about-us/about-us
5. https://www.sbi.co.in/AR1617/
6. https://www.sbi.co.in/portal/web/corporate-governance/sbi-organizational-structure
7. https://www.sbi.co.in/portal/web/home/careers-with-us
8. https://www.sbi.co.in/careers/learning-development.html